Shop price inflation slows to 1% in October amid retailer discounting

Shop price inflation eased to 1.0% year on year in October, down from 1.4% in September, as competition led to widespread discounting, according to the latest British Retail Consortium (BRC) figures.

The rate was marginally below the three-month average of 1.1%. It comes as Non-food prices fell by 0.4% year on year, compared with a 0.1% decline in September. The figure matched the three-month average.

Meanwhile, food inflation slowed to 3.7% in October, down from 4.2% a month earlier and below the three-month average of 4.0%. Within this category, fresh food inflation edged higher to 4.3%, up from 4.1% in September, while ambient food inflation – covering products such as tinned and packaged goods – fell to 2.9% from 4.2%.

Month on month, overall prices were down 0.3%, while food and non-food prices fell 0.4% and 0.2% respectively.

BRC chief executive Helen Dickinson said: “Overall shop price inflation slowed in October, driven by fierce competition amongst retailers and widespread discounting. While food inflation remains high, especially for fresh food where prices continued to rise, it eased for ambient goods. Easing global sugar prices helped to bring down prices of chocolate and confectionery, a treat for those preparing Halloween parties. Beyond food, discounts came early to electricals and health and beauty, as retailers started promotions ahead of Black Friday month.

“The IMF recently warned that UK inflation will be the highest in the G7. With the Budget less than a month away, the Chancellor has an opportunity to relieve some of the pressures that are keeping the cost of essentials high.”

She added: “Labour’s promised business rates reform must deliver a meaningful cut to retailers’ rates bills, and ensure that no store pays more. Rising employer National Insurance Contributions and a new packaging tax have directly contributed towards rising inflation, according to the Bank of England. Adding further taxes on retail businesses would inevitably keep inflation higher for longer.”

Mike Watkins, head of retailer and business insight at NIQ, said: “Inflation is higher than a year ago, and with pressure on household budgets and weak sentiment, retail spend continues to be subdued. However, food retailers are in a battle for market share, and many are offering targeted price cuts, and non-food retailers will wish to avoid any price increases over the next couple of months.”